Bulawayo scents industry revival

Published: 04 August 2017 (691 Views)

Diversification and innovation are the buzzwords for Bulawayo's surviving industries whose resilience in the face of a difficult macro-economic climate deserves applause. While the city has seen a demise of major companies recently, resulting in massive job losses, it would be gross exaggeration to claim its economy is dying. Of late the tide seems to be turning towards recovery and following a familiar pattern across the sectors.

Different surveys by the Ministry of Industry and Commerce and the Confederation of Zimbabwe Industries (CZI), suggest that the second largest city is slowly crawling back towards revival, with some key sectors making positive strives in servicing both the local and export markets.

Industry and Commerce Deputy Minister Chiratidzo Mabuwa spent more than a week in Bulawayo interacting with different company executives, seeking to understand their challenges, opportunities and areas of assistance.

Among the companies visited were PPC Zimbabwe, Arenel, National Blankets, Monarch Steel, Meprin Founders, Bottom Armature Winding Engineering, Sheppco, Zim Hosiery, Ceratrex, Nimr and Chapman, Grills Abattoirs, Ref Air Conditioning, Pump and Steel Engineering among others. The feedback from the tour was that several firms are now doing very well while some need hand-holding to stand on their feet.

Arenel factory, which previously produced sweets and biscuits, has diversified its operations to include beverages and snacks manufacturing following new investment running into millions of dollars. Managing director, Mr Joshua Lepac, said they will soon be launching new products adding that the company was now penetrating the export market, mainly South Africa.

Monarch Steel, a division of Treger Group of Companies revealed that it has recorded 167 increase in export volumes since last year. This has seen the company clinch lucrative deals to supply its products in the regional market having recorded a turnover of about $9 million, management said.

Other companies such as United Refineries Limited, which is into cooking oil and detergents making, have also emerged from the woods. Similar development has been noticed in other agro-processing entities, particularly the milling industry, which has been boosted by increased agricultural production.

Early this year one of the closed factories, Blue Ribbon Foods, re-opened its doors in the City of Kings and has created more jobs.

Pharmaceutical giant, Datlabs Ltd, has also increased its capacity recently, largely spurred by Government policy measures for industry. A recent ministry report that was presented to Parliament indicated that there are certain companies in Bulawayo that have been revived. One good example is Datlabs.

In 2013, when Government inaugurated its focus on Bulawayo, Datlabs was operating at 18 percent, but at present, they are now operating at 78 percent. "There are other textile industries that have been revived, but that is not sufficient," read the report.

Mining and industrial equipment maker, Shepco Group, said it needed about $2 million for retooling so as to expand its operations. The engineering firm operates two divisions — Shepco Industrial Supplies and Shepco BMA Fasteners, a bolt manufacturing section that was bought on liquidation in December 2015 from Steelnet. Shepco Industrial Supplies manufactures mining equipment such as locomotives and underground loaders, among others.

"We want to expand our production and the support that we have discussed with the deputy minister is the need for cheaper finance, which would be a bit long-term.

When its long-term finance, it enables us to invest in plant and equipment to enable us to expand our production. We need about $1 million only for Shepco Industrial Supplies and Shepco BMA, we are looking at another $1 million," CEO, Mr Sheppard Chawarira, said last week.

Deputy Minister Mabuwa has stressed the need to embrace synergies as she urged manufacturing firms, especially those in the engineering sectors to take advantage of renewed momentum in the mining sector to create a strong supply chain that will boost their earnings.

She said Government was ready to assist local industries in establishing strategic partnerships with mining firms for the supply of critical equipment and other raw materials.

"Industry revival has to encompass working with the mining sector in three categories. There is the engineering side, chemicals or consumables and the personal protection aspects," said the deputy minister.

"Presently about 11 percent of mining supplies are done locally and the rest are imported. This presents an opportunity and we want to increase the local percentage supply by linking the manufacturing sector with mines and increasing visibility on what they can offer."

The mining sector is a key driver in the economy with exports receipts for the first half of 2017 having surpassed $1 billion. The sector targets $3 billion earnings this year.

Outside manufacturing, Bulawayo remains an attractive investment destination evidenced by new investments in service, retail and information communication technology industries. Commenting on distressed companies such as National Blankets and some like Merlin, which have ceased operations, the deputy minister said Government was working on modalities to assist them come back on their feet.

Missing multiplier-effect of key parastatals

Economic analyst Mr Reginald Shoko also believes there has been slight improvement in capacity utilisation in some industries but stressed the need to rollout a robust retooling programme taking advantage of the Statutory Instrument 64/2016, which has temporarily closed some competition. He also says revival of key parastatals will have a lasting effect.

"Some traditional industries will require to be innovative for them to be resuscitated. Merlin, for example, cannot come back to do nappies but it would focus on towels and pampers etc.

The economic narrative of Bulawayo has historically been around the state enterprises NRZ and CSC and this that's makes it very important that these are capitalized and their operations are supported through market ring fencing as their recovery from the current challenges would result in growth of others in the value chain," said Mr Shoko.

The Special Economic Zones factor

Bulawayo has been declared a leather and textile Special Economic Zone (SEZ), a move that economic experts say would add impetus to the revival of the city's industry.

Zimbabwe has excess stocks of raw hides and the SEZ model is expected to boost local beneficiation and enhance value addition. According to a survey by the Leather Institute of Zimbabwe, the country could have lost up to $77 million through exporting raw hides in the third quarter of 2016 due to lack of capacity to beneficiate the raw material.

The model is also expected to strengthen synergy with livestock producers and meat processing firms and tanneries such as the Cold Storage Company (CSC).

During the tour Mabuwa stressed the need for existing Bulawayo clothing and textile companies to invest in cotton spinning process to boost the sector's competitiveness.

She said companies that have remained resilient despite the harsh economic environment should consider spinning and weaving cotton so that they enjoy large economies of scale under the proposed Special Economic Zones (SEZs).

"We are expecting a bumper harvest of about 110 000 tonnes of lint but our spinners can only take 15 000 tonnes which means the bulk of the lint will be exported," she said, adding that this was an opportunity for local firms to diversify.

The clothing and textile sector in Bulawayo, she noted, has the potential to grow by tapping into a number of opportunities to come as a result of the SEZs.

"Let's venture into spinning and ginning so that we absorb all that is coming from our farmers. It's a shame that industry cannot absorb the whole lint from this year's bumper harvest," she said.

Experts say the SEZ must also be opened up not limiting Bulawayo to the textile and leather but encompasses other sectors along the value chain.